Manufacturing Quickened In September - October 1, 2012

The Institute for Supply Management posted some surprisingly good numbers within the past hour, as that trade group reported that manufacturing activity had increased in September for the first time in four months, climbing above the 50.0 mark that signifies that this critical sector is on the mend. In all, the survey came in at 51.5, nearly two points above the 49.7 consensus view. In August, the ISM had reported a survey result of 49.6.

The September tally was the first since May in which that metric was above the 50 threshold that indicates expansion in this sector. Moreover, the forward looking new orders gauge also climbed to its best reading since May last month, rising to 52.3 in September from 47.1 the previous month. At the same time, employment jumped to 54.7 from 51.6.

Still, the improvement was not universal, as several components, including production (at 49.5), backlogs (at 44.0), and exports (at 48.5), still indicated some contraction.

On the other hand, in addition to new orders and employment, we saw gains in the latest month in supplier deliveries, inventories, and prices.

It should be noted, however, that last month's strength, albeit surprising and clearly welcomed by the economic bulls--especially coming at a time when manufacturing in China, the world's second largest economy is now contracting--wasn't all that far reaching. In fact, the September gain, while following the three straight monthly setbacks, was still the smallest advance of the year, having been battered by materially stronger performances from January through May.

Finally, on a sector-by-sector basis, we find that 11 of the 18 industries surveyed saw increases last month, led by textile mills, food, and beverage and tobacco products. Meanwhile, most respondents among the purchasing manager executives reported that business is picking up following a summer lull. However, the optimism expressed in general was not universal, as purchasers of apparel, leather, and allied products, for example, reported overall weakness.

On the whole, however, the report was uplifting and a rare piece of positive news on the business front over the past few weeks.